Summary:

• German ZEW survey on current situation inches up from 86.4 to 86.7
• Companies in Germany trim their economic outlook with an expectations index declining from 17.5 to 10
• Euro falls’ speed up following the equivocal German release

The German ZEW survey revealed that while companies keep their bullish prospects as for the current situation, they cut back on their expectations with regard to economic growth in the next 6 months. As a result, the euro is edging lower being one of the poorest currency in the G10.

The August survey on the current situation showed an increase from 86.4 to 86.7 beating a forecast at 85.2 suggesting uninterrupted upbeat moods across the German economy. Having said that, the survey on expectations marked quite a noticeable decrease from 17.5 to 10 whereas a decline to 15 was expected. It indicates a high degree of anxiousness over the future path of German growth. One could assume that the higher euro could have given rise to a deterioration in that area.

While the current backdrop remains sturdy, companies are getting more worried about the future. Source: Bloomberg

As a result, the euro is slipping against the US dollar being the second worst currency in G10 just giving way to the New Zealand dollar. It’s worth mentioning that the greenback is gaining momentum across the board which could exaggerate an adverse effect on the euro stemming from the ZEW survey.

The EURUSD is declining and nearing an important support zone which could provide some relief for buyers. Source: xStation5

Taking a look at the chart above one could notice that the price has broken a 38.2% retracement of a recent upward move. For that reason, an extended move towards 1.1745 seems to be likely. If that level is broken as well, ample space for further losses will be opened.